Investor's Corner - March 19, 2008

Smart portfolio moves for retirement

Keith SandvossMarch 18, 2008 

Keith Sandvoss is a financial advisor and accredited asset management specialist for Edward Jones Investments at 208 Main Street in Fort Mill. He can be reached at 802-4310.

For most of your working years, your invest-ment strategies, by and large, will probably revolve around achieving sufficient growth to help you meet your long-term goals, such as college for your kids and a comfortable retirement.

But once you are retired, you can't just sit back and put your investment portfolio on "autopilot." What types of portfolio moves should you make as a retiree?

• Generate your own paycheck. When you're retired, you can collect Social Security and receive distributions from your 401(k) and IRA. But you'll also probably need to generate some income from your investment portfolio. Consequently, you'll need to own the appropriate mix of investments.

• Protect against inflation. Even if you do need some of your investments to provide you with an income stream, you can't ignore the need for growth because you'll have to contend with inflation.

To fight inflation, then, you will need at least some exposure to stocks, which offer the potential to provide returns greater than the inflation rate. Although it's true that by investing in stocks you can lose some, or all, of your principal, you may be able to reduce your risk level by buying quality stocks and holding them for the long term.

• Leave a legacy. As you may know, the estate tax laws are in flux. How could you help your family cope with a potential estate tax burden? You could make some "tactical" moves, such as rolling over your 401(k) to an IRA, which, when passed on to your heirs, could be "stretched" for years to reduce the tax bite. You could also reduce the size of your taxable estate by making gifts to family members and charitable organizations.

Clearly, there are many portfolio considerations for retirees. So, when you're nearing retirement, start planning ahead. By making the right moves, you can make your "golden years" considerably brighter.

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